It hasn't hit my town all that badly yet. Houses are still moving if they're priced right, though one aggressively-priced house in my neighborhood went under contract within two weeks of being listed only to have the "under contract" sign removed this week and now it's showing up at Realtor.com again. Obviously the buyer wasn't able to get a mortgage after all. The current owners moved out yesterday. Now the realtor has to sell it as an empty house. Another house, of the type known in places like the New Jersey Real Estate Blog as a "POS Cape", closed at $440K in mid-November -- not too shabby, but down around $20K from what it would have sold for last year.
I live in one of those neighborhoods in which everyone has been either remodeling, adding levels, or tearing their houses down and replacing them with big, ugly stucco boxes with teeny-tiny windows. Last year a developer bought a POS cape on a 100 x 100 lot (oversized for this neighborhood) for $420K that looked like it had been sold by an elderly person who had never done any updates. He tore off the roof, tore it down to the four walls, added out to the side, and slapped up an ugly, vinyl-sided box in record time. The inside, from what I hear, is nicely finished with mid-range finishes. The original listing price was just over a million dollars, and now it's under $900K after six months on the market -- and still not moving. Another spec house a few blocks away is being sold directly by a developer who hasn't even bothered to put in a driveway or landscaping. It's an attractive house, on a deep property, but no one's biting there, either.
At least some of the problem is that with the demise of the no-documentation and the bad-credit-no-problem mortgages, few people can qualify for jumbo mortgages of over $417,000 anymore. "Competition" from foreclosures hasn't really hit here yet either, though I suspect that will change. I wonder sometimes how some of the people who have been using their house as a piggybank not just for additions and new "gourmet" kitchens and home theaters, but also for new SUVs and vacations, will fare as the value of their homes drops. If we see a Wall Street bloodbath, as I suspect we will, northern New Jersey bedroom communities will feel the pain, adding further to the problems of a state that has been grossly mismanaged for over a decade.
Yesterday I posted about how 45,000 Citigroup employees are likely to lose their jobs because Charles "40 Million Severance Man" Prince steered the company onto an iceberg.
Today it's Wells Fargo:
Wells Fargo & Company, the nation’s second-largest mortgage lender, after Countrywide Financial, said yesterday that it would take a $1.4 billion fourth-quarter charge for losses it anticipated in connection with home loans.
The bank said that it would continue to provide home equity financing directly to customers, but that it would not originate or acquire home equity loans through indirect channels. Wells Fargo will also not originate home equity loans through third parties when the combined loan-to-value ratio of the first and second mortgages is over 90 percent or where the second mortgage is not behind a Wells Fargo loan.
The bank is putting $11.9 billion into a special liquidating portfolio. The bank’s filing with the Securities and Exchange Commission said that the figure is 3 percent of its total loans outstanding, but that it represents the riskiest element of the $83.4 billion in its National Home Equity Group portfolio. The loans are generally clustered in areas of the country that are having the greatest decline in retail prices.
R. Scott Siefers, an analyst who follows Wells Fargo for Sandler O’Neill, said: “It is unfortunate certainly because Wells Fargo has had an aura of invincibility. Over the last few years, it has not gotten involved in a lot of the issues that have caused so much pain for the group. It is one of the largest mortgage lenders in the country so this is going to be painful for everybody."
The scariest aspect to the ripples from the end of the housing bubble is that Americans are out there shopping, whipping out the plastic, and seem to be still largely oblivious. You don't have to understand exactly how mortgages are packaged into securities and traded like stocks to look at the numbers coming out of these financial firms and wonder when the whole thing is going to collapse. When you have a Republican presidential candidate alleged to have said MORE THAN ONCE that he would not appoint a Muslim to his cabinet (and whose defenders are doing so by questioning the veracity of the -- you guessed it -- Muslim interviewer in the first instance), and another who takes foreign policy advice from Norman ("Bomb Iran Now") Podhoretz and who is even more bellicose towards Islam than George W. Bush, the silence surrounding the purchase of a sizable chunk of one of the largest financial firms in the country by Abu Dhabi is baffling.
If the U.S. is a giant shopping mall, then it's a mall whose anchor store is at the edge of a very steep cliff. And after you leave that anchor store, with the doors back to the mall now locked, there's nowhere to go but over the precipice.
Aucun commentaire:
Enregistrer un commentaire